Minerva Neurosciences, Inc.
Q3 2018 Earnings Call Transcript

Published: 5 Nov 2018

[Operator:]

Welcome to the Minerva Neurosciences Third Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session following today's prepared remarks. This call is being webcast live on the Investors section of Minerva's website at ir.minervaneurosciences.com. As a reminder, today's call is being recorded. I would now like to turn the call over to William Boni, Vice President of Investor Relations and Corporate Communications at Minerva. Please proceed.

[William Boni:]

Good morning. A press release with the company's third quarter 2018 financial results became available at 7

[Remy Luthringer:]

Thank you, Bill, and good morning, everyone. Thanks for joining us today. Over the past quarter, I'm pleased to report that momentum has continued to build in each of the five late-stage clinical trials that are underway with three Minerva product candidates. These trials include

[Geoff Race:]

Thank you, Remy. Earlier this morning, we issued a press release summarizing our operating results for the third quarter ended September 30, 2018. A more detailed discussion of our results may be found in our quarterly report on Form 10-Q filed with the SEC earlier today. Cash, cash equivalents, restricted cash and marketable securities as of September 30, 2018 were approximately $97.7 million. We believe that the company’s existing cash, cash equivalents, restricted cash and marketable securities will be sufficient to meet its cash commitments for at least the next 12 months from today and into mid-2020. Research and development expenses for the three and nine months ended September 30, 2018 were $8.4 million and $25.9 million respectively compared to $9 million and $23.7 million for the same periods in 2017. This variance in R&D expenses was due to lower development expenses for the seltorexant program due to the amendments to our co-development and license agreement with Janssen, which was partially offset by higher development expenses for the Phase III clinical trial of roluperidone and the Phase IIb clinical trial of MIN-117. We expect R&D expenses to increase during 2018 in connection with increased patient enrollment and related support activities for the roluperidone and MIN-117 clinical trials. General and administrative expenses for the three and nine months ended September 30, 2018 were $4.1 million and $12.2 million respectively, compared to $2.5 million and $7.9 million for the same periods in 2017. This increase in G&A expenses was primarily due to an increase in non-cash stock based compensation expenses and salary costs from increased staffing to support precommercial activities. We expect G&A expenses to increase during 2018 as the company begins to invest in the infrastructure necessary to support its growth. The company reported a net loss for the three and nine months ended September 30, 2018 of $12 million and $37 million respectively or $0.31 and $0.95 per share, respectively, compared to $11.3 million and $31.7 million, respectively, or $0.28 and $0.84 per share, respectively, for the same period in 2017. During the third quarter, the company also made final repayments on term loans with Oxford Finance LLC and Silicon Valley Bank. All outstanding debt under the company's working capital agreements with these organizations has been repaid in accordance with the loan terms. Now I'd like to turn the call back to the operator for any questions?

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Jason Butler with JMP Securities. Your line is open.

[Jason Butler:]

Hi, thanks for taking the questions and congrats on the progress. First, a couple on roluperidone. Can you give us any additional color into the two countries you said have declined to participate in the Phase III trial? And then I know you haven't completed enrollment yet, but just on an ongoing basis, what percentage of eligible patients are enrolling into the open-label extension study?

[Remy Luthringer:]

Hi Jason, Remy speaking. So I can give you obviously additional color, yes. So two countries indeed in Eastern Europe have declined to participate to the study. So what I can tell you, I can obviously not give you all the interactions with the health authorities, but what I can tell you is that the reason which is why they have not participated is not at all related to the molecule or to any safety issues. And I have to say that it is a little bit misleading here, while it's questionable because one of this country has participated in the – into Phase IIb trial and obviously, it was one of the countries having a very nice recruitment there. And to be very clear, we received also from the two countries an approval from the health authorities and at the end of the day, it has been declined by a central governmental body. So this is why we have anticipated and we have added additional sites and additional countries in order to anticipate this decline of this two countries. Now concerning the number of patients going into the extension, as you know, this is optional, and the patients have to decide if they want to enter the extension, obviously, with a discussion with the PIs and with the caregiver. But so what I can tell you is that I mean, in the Phase IIb, and it is really a copy paste of the Phase IIb, we had quite a significant number of patients entering into this extension. Once they completed the 12-week double-blind phase, it was at around 80% of patients who entered into the extension. And most of the reasons why patients did not enter was really practical reasons like, for example, patients who wanted to be with their family, who had, I have to say, some vacations. So clearly, a lot of patients have decided to enter the study and I hope it will be exactly the same as the Phase III.

[Jason Butler:]

Okay great, very helpful. And then just a quick follow-up. MIN-301, can you just walk us through what the remaining steps are here in terms of preclinical studies and preparation for the IND submission?

[Remy Luthringer:]

So we're, obviously, working on the IND-enabling studies as a preclinical package, regulatory package to bring this molecule in domain. We're currently working on all the tox studies, including long-term tox because, as you know, this molecule has a disease-modifying potential. So you really need to be able to give this molecule long enough in order to see the effects. We're also working on, I have to say, finalizing a very robust with a limit of quantification, which is very low in terms of [indiscernible] because interesting enough, I mean, MIN-301 is working at extremely low concentrations. So all this efforts are going on. And in parallel, we're also working on better understanding the mechanism of action of the molecule. And we're also testing based on preclinical models, the full potential of this molecule because basically, I think it's really a molecule, which is, I have to say, adaptive for all the neurodegenerative disorders. Also, we have started with Parkinson's disease. So we're really very extensively working on this in order to have the package ready to go domain.

[Jason Butler:]

Okay that’s great. Thanks for taking the questions.

[Remy Luthringer:]

Thank you.

[Operator:]

And our next question comes from Joel Beatty with Citi. Your line is open.

[Joel Beatty:]

Hi, thanks for the update this morning. It looks like the trial of MIN-117 will be the first of the trials to read out next year. Could you discuss a little bit about the – what's unique about the mechanism of action there compared to other agents that are used to treat major depressive disorder? And what end points in that trial will help tease out any unique aspects of that agent?

[Remy Luthringer:]

So this is a great question, Joel, yes. And I think really I mean this molecule is a molecule, which is really able to address definitely partial responses or non responders. And the good news is obviously that it's obviously a draft guideline from the FDA, but I mean the FDA wants really to have molecules, which given in monotherapy are really addressing the different types of depression, also subtypes of depression among the MDD. So why this molecule can address this type of patients who are not really responding or not responding at all to adjunctive therapy is that this molecule is working definitely via the monoaminergic pathways, serotonin and dopamine. But what is specific in terms of serotonin, it is not only inhibiting the reuptake of serotonin, but it has also an effect on the 2-HT1A autoreceptor, which is located presynaptically and this is definitely known to have an effect in terms of reducing the onset of reversal of mood and the other aspect I already mentioned is that this molecule is also having an effect on dopamine, and in other words, it is increasing the availability of dopamine into synaptic cleft. So all this together is really giving a profile to this molecule, which is completely unique, and this molecule is extremely well tolerated because, I mean, we are not having an effect on – a direct effect on noradrenaline, which, as you know, has some impact in terms of heart rate, blood pressure and so on. So this is the uniqueness of this molecule, and all the preclinical models we have tested are really indicating that this is the case, and the Phase IIa was also very promising because, if you remember, we had only in the 2.5-milligram group of our molecule, people who really completely responded and recovered completely from their depressive episode, whereas with a reference molecule, it was not the case. So this is really what we're aiming to do. In this Phase IIb study, the objective is definitely to confirm that the molecule is showing again the same effect in a larger sample size. We're more specifically now also checking the aspect of anxiety because we had an extremely good signal in terms of anxiety and this is obviously important because it might avoid to comedicate patients with benzodiazepines, for example. And afterwards, we're focusing also where we had very clear signals in the Phase IIa, which is cognition, sexual function or absence of effective sexual function and also the absence of this molecule in terms of effect on sleep, we have not the classical effect on REM sleep you might see with this – most or all antidepressants working via the monoaminergic pathway. So this is what makes the molecule specific. And lastly, but not the least, sorry to be so long, we did also some models – preclinical models looking to anhedonia and definitely, we have a very, very nice reversal in terms of anhedonia. And this is usually the reason why the patients are not responding completely to existing therapies. So long story short, I think this is what makes this molecule unique.

[Joel Beatty:]

Great, thank you.

[Remy Luthringer:]

Thank you, Joel.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from Biren Amin with Jefferies. Your line is open.

[Biren Amin:]

Yes, thanks guys for taking my questions. Maybe I can just start with roluperidone, Remy. I think you mentioned two countries in Eastern Europe are no longer going to participate. How many patients in the Phase III were enrolled in sites in those two countries? And how you plan on handling patient data from those two countries?

[Remy Luthringer:]

So great question there. So to more precise, I mean, one of the country is Russia. And Russia participated with around five sites in the previous trial. And so the Russia brought around 20, 30 patients, it's top of my head, I mean don't blame me if the numbers are not completely correct, but this is the number more or less of patients which have been recruited in Russia. So this is what is the impact. So what we have done already, this was just to – for good practice. I mean when we initiated or when we submitted to the different countries participating to the study, we had some backup sites. This does not mean that sites are not good or whatever, these are just sites who can compensate if you want to – one site is not really recruiting well or you want really to get one site replaced by another site. So obviously, we've activated these sites immediately. And indeed, we have added two additional countries. We already have selected but we did not activate as well. So this is what we have done in order to compensate. I've responded to your questions completely, but please go ahead.

[Biren Amin:]

And were there any patients that were in the treatment period that had to be discontinued when the countries made the decision? And if so, how are you going to handle those clinical data once they're analyzed in those patients?

[Remy Luthringer:]

Not on – clearly, I mean, we have not started anything in these countries just because this was in the face of getting the approval for the studies, there was no patient who has been treated in this country. So there is nothing to stop or to do in these countries because these two countries have just not started yet. So clearly, nothing to worry about this one.

[Biren Amin:]

Got it. And then just on the Phase III in general, have you been able to look at the baseline characteristics of patients that have enrolled in the Phase III? And can you tell us anything about in terms of how it compares to the Phase II baseline characteristics?

[Remy Luthringer:]

Yes, absolutely. As you know, we are following this very carefully, as you know, and we had long discussions around this the way we're doing this. So definitely, we're doing this and I always – as you know, we've added United States, and I wanted really to make sure that the things are really similar. And I have to say that the baseline characteristics of the patients whatever is the country, including U.S., are very similar between the Phase III and the Phase IIb. So for the moment, I'm more than confident that we are catching exactly the same patients, we have exactly the same quality because we also blind it. We are following how the PANSS score is evolving over time to pick up sites where maybe the scoring is deviating in order to bring them back. So all these controls we have implemented are definitely telling us that we are dealing with exactly the same patient population and this is exactly the same quality in terms of scoring the symptoms. So for the moment, I'm extremely, extremely, extremely encouraged and positive with what we see. And as you know, this is what we continue to do all along the study. So clearly, very, very encouraging.

[Biren Amin:]

Got it. And then may be just one last question from me. You're running a number of trials in major depression. And we've had FDA Advisory Committee last week to look at therapies in depression. Any key takeaways that you took away from the FDA Advisory Committee last week?

[Remy Luthringer:]

I don't know which one you're referring to because there are obviously two molecules, which are not the same.

[Biren Amin:]

[Indiscernible]

[Remy Luthringer:]

Okay. So I was guessing that you were asking this question. So I think what – it comes back exactly to what I said before. I said the FDA now wants definitely to see very clear data in terms of monotherapy before you go with add-on. And it seems this is a take home I take, and I think that what we're doing here, I mean, to go with the Phase IIb, which is a very well-powered study, where we have two doses versus placebo, where we have the right scales and the right duration – treatment duration, excuse me, I think this is the way to go in order to be convincing and to design the right Phase III. So this is my take-home message, is that you have to first that you've really an antidepressant in your hands in monotherapy. Afterwards, I mean, the mechanism of action to the Alchemy molecule is another topic, but I do not want to comment on this topic because this is not really what I would like to do because I would like to focus on our molecule.

[Biren Amin:]

Okay, great. Thank you.

[Operator:]

Thank you. And I’m currently showing no further questions at this time. I like to turn the call back over to Remy Luthringer for closing remarks.

[Remy Luthringer:]

Yes, so thank you really everybody for taking part to this call, and thank you also for these great questions, and we're really looking forward to update you moving forward and to give you feedback about this five exciting clinical trials currently going on. Thank you so much. And have a nice day.

[Operator:]

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect. Everyone, have a great day.